Valens Semiconductor Ltd. (NYSE:VLN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Valens Semiconductor Ltd. engages in the provision of semiconductor products that enables high-speed video and data transmission for the audio-video and automotive industries. On 31 December 2021, the US$341m market-cap company posted a loss of US$38m for its most recent financial year. Many investors are wondering about the rate at which Valens Semiconductor will turn a profit, with the big question being “when will the company breakeven?” We’ve put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 5 industry analysts covering Valens Semiconductor, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$23m in 2024. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 64%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Valens Semiconductor’s upcoming projects, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Valens Semiconductor has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are too many aspects of Valens Semiconductor to cover in one brief article, but the key fundamentals for the company can all be found in one place – Valens Semiconductor’s company page on Simply Wall St. We’ve also compiled a list of relevant aspects you should look at:
Historical Track Record: What has Valens Semiconductor’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Valens Semiconductor’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.